This is a guide about how to pick the best Cryptocurrency to Invest in. A list of steps that should be followed while choosing new coins or altcoins. While listening to what others have to say is a good idea, doing your own research before making any investment will help you choose the best stock. Follow a set of guidelines to support you in selecting the best cryptocurrency to invest in. These rules or stages can be applied to both short and long-term investments.
Tips For Picking Best Cryptocurrency to Invest
To Pick the Best Cryptocurrency to Invest in for long and short terms follow these rules. These are the fundamentals you should understand before investing in any cryptocurrency.
1: Read White Paper
The first rule is to study the white paper of the cryptocurrency you’re going to invest in. Every coin has a white paper that defines what they plan to accomplish, how they plan to do it, and when they plan to do it. It’s critical that you look into the problem they’re trying to solve. The team behind the business clearly provides the answer they’ve come up with. See the state they are currently in there on their roadmap.
2. Check circulating supply
The second rule is to look at the coin’s circulating quantity and price, or, in other words, the market capitalization of cryptocurrencies. Be careful with your estimates because certain coins only have a portion of their supply circulating, and only a portion of that supply is tradable, which can affect the coin’s future price because new coins will enter the market over time. Furthermore, the present price is an indicator of perceived worth, but only to a limited extent; otherwise, the price should never be the deciding factor in an investment. The driving forces are the technical and future potential.
If you’re new to investing, you could be tempted to purchase low and sell high, but you should be aware that market capitalization can sometimes represent an inflated price. If you observe a currency with a low daily volume but a large market capitalization, it’s possible that the price of that coin has been manipulated.
3. Check Marketcap
The total value of all the coins currently circulating. If the market cap is low, especially for a coin that’s been around for many years, then you should avoid investing in such cryptos. The need for market demand for crypto measurement is the market cap of a coin.
4. Know Maximum Supply
Another factor that should be considered is the maximum supply of those coins. The crypto, which doesn’t have a fixed maximum supply should be avoided. Instead pick something like bitcoin, which has only a 21 million coin maximum supply.
5. Check developers activities
It’s critical to follow Rule 5 and monitor the activity of developers. The truth is that anyone who can code can create their own cryptocurrency, which unfortunately comes with several scams. The majority of successful or promising coins are announced on public software repositories like Github. If a developer is releasing a new crypto coin, that developer should have a track record. Nobody who is completely new to the network will join with a new coin announcement. It takes time to come up with a successful cryptocurrency idea.
So there should be a visible activity of a developer. If you don’t know to code then it will be impossible to find out from a complex code whether the coin is legitimate but there are other factors to look out for regularity. Its constant updates about the coin, new features are added to the coin on a regular basis.
Many new altcoins are small improvements to Bitcoin. How do you know it’s a gold mine? When it brings something new and revolutionary to the cryptocurrency market. Last but not least, if a developer truly believes in a product, he or she will answer queries, respond to criticisms, and be ready to assist.
Cryptocurrencies that are run by foundations or corporations pre-mine a bunch of coins before they’re released and set it aside for themselves. So they can then dump it on retail investors. Where the founders gave themselves a lot of coins and now they’re slowly selling them to naive retail investors. This is not true for bitcoin. Satoshi Nakamoto did it wasn’t really a pre-mine. He mined a million coins. These coins have never been moved and they’ve never been sold.
6. Check Social Presence
Check the cryptocurrency’s social media presence. It’s critical that the crypto coin you’re considering investing in, whether for the long or short term, has a strong community of supporters. Take a look at social media, but don’t be deceived by the numbers on Facebook and Twitter. Check out the Bitcoin talk subreddit on Reddit to see what people are saying about the cryptocurrency. Join their Telegram to see if it’s active, and if it is, you can learn more about the coin’s genuine community and discover if it has widespread support. If you follow these guidelines, a coin with high backing has a much better chance of thriving in the market.
7. Check Hash Rate
Hash rate is just a measurement of how much computing power is being contributed by miners on the network. You can think of the network as sort of like a supercomputer, and the hash rate is a sort of measurement of the computing power of the supercomputer. Which is just all the minors and nodes connected to the network. The higher the hash rate of a coin or network, the more secure it is because there are more computers and more computing power securing the network. If a coin exists for a long time and still has a low hash rate, it just means that there aren’t as many miners interested in it and the network is not as secure.
For example, the historical chart of the Litecoin hash rate shows that computing power on the network has been sort of cyclical. It goes up, it goes down and doesn’t seem to be going in any direction. There’s some sort of variable demand on the network. Therefore, Litcoin is not a good choice on the basis of this hash chart.
The hash rate goes from the bottom left side up to the right side in an upward direction means promising crypto based on its hash rate. This type of hash rate looks like there’s increasing demand over time. If you’re an institutional investor or someone with a lot of money, you’re not going to put your money into something that has a weak hash rate, where the network is not being secured with as much power. Some basic measurements of hash rate
|Unit||Hashes Per Second|
All of these criteria are present in bitcoin, definitely having the most secure network as measured by hash rate, fixed max supply, decentralized, is not issued by a corporation and it’s got the largest market cap. Which makes it available for institutional investors. These guidelines will help you lower your investment risk dramatically. It does not ensure success, but it does increase your chances. You will not only be investing in a more safe coin, but you will also have a better understanding of your investment.